Saturday, July 23, 2011

It's starting to seem ridiculous to call this a debt "talk"

Apparently Cantor isn't the only House Republican that can throw a hissy-fit. And it sounds like Obama is increasingly looking towards the "constitutional option". I think the 14th amendment case is weak. Certainly it's grounds for continuing to pay actual debt obligations, but I don't think that was ever in question by anyone. It doesn't really provide cover for other obligations.

But he can cite the 14th amendment if it makes him feel better - I'd just cite Article 1, section 8. Two things Congress unambiguously has the authority to do are spend money and levy taxes. The math on this isn't tough:

Outlays - revenues = deficits

Congress has specified the left hand side of the equation for the president by statute. They don't get to rewrite the laws of arithmetic by statute. The very idea of a debt limit is stupid, and the president is put in an impossible position here. He has to break some law here - a debt limit law, an appropriations law, or a tax law. It seems to me breaking the first of those three laws makes the most sense. Congress has maintained control over taxing and spending for over three hundred years. We've only had a debt limit for about 70 years, it's only really been binding for about 40 years and in those 40 years it's been increased essentially as a formality. A law has to be broken, and adhering to the debt law rather than a tax or spending law seems to me like it would be a greater affront to American democracy and liberty. It would better if we just let the laws of arithmetic alone and didn't pass these things, of course.

My one concern is that a non-trivial segment of the population already sees Obama as a tyrant. If Fox News and others starts talking about Obama directly flaunting the will of the Congress, this could get very ugly, very fast.


  1. No, Obama has clearly stated that he doesn't have the constitutional authority to raise the debt ceiling - and, well, to be blunt, he doesn't.

    As for who is and who is not throwing "hissy fits," that label can stick to Obama as equally well as it does to Boehner, Cantor, etc.

  2. Could you clarify why?

    Obama seems to have entertained the widest range of options he's willing to entertain. With the exception of some in the gang of six he seems to be the only one willing to talk this through and actually propose options that give something to the other side.

    Nobody is ever perfect in these things, but I'm curious why you think it can stick "as equally well as".

  3. Because Obama has a well known temper and a rather acerbic tongue.

    "Obama seems to have entertained the widest range of options he's willing to entertain."

    Obama has see-sawed back in forth on a bunch of issues; maintaining that he has drawn an line in the sand and then walking away from that line. He would have been much better off if he did not engage in that sort of behavior; it makes him look erratic and when he does fold it doesn't help his position but hurts it. He's made a number of textbook type errors when it comes to negotiating with the House in other words.

  4. Does he have a temper? I always heard he was cool as a cucumber. I don't think you or I have any concept of what he's like in negotiations, but let's say I concede that one. OK, he has a temper.

    But you seem to admit he hasn't clung to a single approach - he's been willing to discuss multiple. And presumably you're willing to admit the simple fact that he hasn't just shut down a negotiation the way Cantor and Boehner have (unless I missed that news item). So I'm not sure how I'm wrong to differentiate between them.

  5. "But you seem to admit he hasn't clung to a single approach - he's been willing to discuss multiple."

    There's is a significant difference between being flexible and being rigid and then flexible and then rigid then flexible and rigid and flexible, etc. Looking at what these people are doing from the standpoint of my course on negotiations they are simply going about this in the incorrect manner. _Getting to Yes_ by Roger Risher, et. al. is what I look to when it comes to negotiation tactics, etc. and it is obvious to me that the negotiation process here has violated the cardinal points of that book - (a) it would have been much, much better for both sides to withdraw Obama and Boehner/Cantor from the process (maybe the politics of the situation doesn't allow for that); (b) no one is looking for any sort of agreed upon objective standard; (c) no one has been really willing to talk about what their actual interests are (there has been a lot of grandstanding from both sides about what they are interested in, but that is largely smoke and mirrors); and (d) both sides came to the table with firm demands (that explains why the lines in the sand keep on getting erased) instead of mere ideas and suggestions.

    It isn't surprising that this thing has fallen apart, they have both approached this as something of a zero sum game; that's not surprising because the real interest of both parties is re-election. If they could admit that instead of making a bunch of moralizing speeches then you'd see a lot more progress. But the "good prince" (or the "good oligarch") can't really do that in American politics these days.

  6. So you think he's a bad negotiator. You mentioned that before. You and Krugman agree on that.

    But I'm still not sure why you think my characterization of the difference between Cantor and Boehner on the one hand and Obama on the other is wrong.

  7. In other words, neither side seems to be engaged in what is called "principled negotiation" in the aforementioned book. Perhaps they just can't. Sometimes institutions fail because they aren't structured in such a way to come out with what we might think of as useful outcomes. What comes to mind here is city of Rome - whose informal constitution was "designed" (after the kings were booted) to deal with a pretty small area in which it governed; that was eventually bootstrapped to a giant empire and it had a lot of problems dealing with the the issues associated with that empire because it really wasn't "designed" to be a government of empire - not surprisingly it broke down and an eventually a bunch of king-like men took advantage of that, one finally succeeding to take the throne and finally kill off republican Rome for good (which keeping republican like institutions in the various cities that dotted the Empire - that's where the republic lived on).

    I am becoming increasingly skeptical of Madison's claim that you can have a large, heterogenous republic run from a centralized hub.

  8. Daniel,

    Being a bad negotiator (from my POV) means that you are letting non-principled issues, tactics, etc. get in the way of getting the deal done. From my POV that's what both sides share, and that is what is most damning.

  9. I don't know. On one hand they've all got another week of posturing and posing before they'll have to publicly acknowledge that they're going to make a deal of some sort, probably much heavier on the revenue side than most Republicans are going to expect, and considerably less deficit reduction.

    I expect a resolution, though, as neither side is prepared to deal with the possible fallout.

    Obama holds more cards than people think. As we discussed on, he is likely to have a free hand because of the conflicting legislation and constitutional requirements. If he wants to call down fire and brimstone, he can cut off social security and medicare and let the republicans explain to their constituents. If he wants to slap the republicans around a bit he can violate the debt ceiling, and let them challenge in court (which they will lose, if they are even granted standing). There is also the MMT $1Trillion coin option which seems absurd, but also believable.

    For this reason the republicans are going to settle for much less than they want(and claim they averted disaster by compromising with the crazed marxist), and Obama will come out looking like a president (and claim to have saved social security and medicare). Everybody gets what they want.

    Gary, I've recently taken an interest in the transition between republican and imperial Rome, and would like to hear any recommended literature, keeping in mind that I am not a degreed historian.
    In the spirit of sharing, I've been enjoying Dan Carlin's retelling of the cycle here:
    (I like the spoken medium)and so far, I've also read Tom Holland's 'Rubicon'.

  10. Some thoughts:

    Scullard, _From the Gracchi to Nero_ (1970)

    Mouritsen, _Plebs and politics in the late Roman republic_ (2001)

    Brunt, _The Fall of the Roman Republic and Related Essays_ (1988)

    Talbert, _The Senate of Imperial Rome_ (1984)

    The dates of publication are approx. to what I remember.

  11. BTW, transition is an interesting word to use; bloody, vicious tumult is the phrase I would use.

    If you are interested in a primary source primer check out the classic and rather awesome _As the Romans Did_ (it is in a second or third edition by now as I recall). Professor Shelton does a masterful job collecting together a sort of A-Z resource on the Roman world (everything from abortion to burial practice to gender roles to religio-philosophical practice to sport to urban architecture to the zoology of the Roman world).

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  13. argosyjones,

    The Social Security Trust Fund contains over $2.6 trillion of non-negotiable Treasury Bonds. Congress would have to pass a law in order to default on that debt. That won't happen any time soon, so to say that Obama can, at his discretion, stop making Social Security payments is incorrect. The Treasury is required by law to redeem the bonds held by the trust fund. Even in default, those bonds would still have to be redeemed unless Congress acts.

  14. Also, even at the point where the debt ceiling is reached, I would think that would mean the government would not be able to use FICA revenues for other purposes (which they do now by issuing those non-negotiable bonds). Since for the moment Social Security is self-financing, it should be able to pay benefits without redeeming the existing bonds.

  15. I hope a crack up boom, default, and detrimental demographics shift hits the the ultra-statist euro zones and North America very hard. That is all.

  16. David: I'm well aware that it's illegal for the president to set spending priorities in any case. My argument is that Congress has passed legislation, that in combination with the 14th amendment, makes the president's position impossible. He must break some law (it's unconstitutional for him to ignore a legal act of congress). The supreme court would probably defer to the president in the case of impossibly conflicting laws.

    As to the Social Security Trust fund, you're mistaken. Obama can just order the SSA not to redeem the bonds. Sure, that's illegal maybe, but no more so than any of his other options.

  17. Gary:

    Thanks for the suggestions, especially As the Romans Did.

  18. The differences between this negotiation and other budget negotiations are as follows:

    1) The sword hanging over Damocles' throne is sharper than usual, and has been thoroughly dipped in South American frog poison.

    2) Nobody knows when it drops.

    Both of which are good reasons that long-term, the US would be wise to a) conduct these debates in the context of an appropriations bill, when the zero hour is known consequences (a government shutdown) are less onerous, and thus b) include necessary borrowing authority in the budget.

    That said, if Obama does do any legally-questionable maneuvers such as the 14th Amendment option or coin seigniorage, espcially the former, I suspect that the response of the House won't be a lawsuit, but articles of impeachment. (Which will go utterly nowhere in the Senate, but everyone knows that).

  19. Argosyjones,

    My second point was that SS is self-financing (at least close) at this point, so if they can't buy more special bonds (because they're part of the debt) they'll have to actually use that money to pay benefits. That money CANNOT be used for other purposes without the ability to create debt. The horror!

  20. So you're saying it would be illegal for Obama to divert social security funds to pay for some other priority.

    Yes. But not more illegal than any other option he is left with.

    Maybe treasury has a little while to post-date checks, or whatever accounting gimmicks they will need to use, but once that runs out, Obama's administration is bound to break the law, barring the passage and non-veto of a bill that clarifies the situation.

    Tell me why the rules about SSA funds take precedence over the rules about appropriations, and we'll have an interesting debate.


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